Fiat Case

Topics: Net present value, Cash flow, Automotive industry Pages: 2 (666 words) Published: October 27, 2014

Fiat's Strategic Alliance with Tata
What is the business opportunity in India? Do you think that Fiat needs a partner? Why? Actually there is a lots of opportunities in India.
There is a huge automobile industry in India which was valued at over 26.3 billion USD. Unit sales in the same year exceeded 1.5 million. Passanger vehicle sales is expect to grow 14%-16%. There is a big potential in owned car statistics. It was expected to grow from seven in 1.000 to eleven in 1000. This growth can easily be underestimated but when we examine the population of India, which is 1.1 billion, we can find out the opportunities. On the other hand, government realized the important of automobile industry. Even, The Indian government launched its own company and made a JV with Suzuki. Lastly, in 1991, liberalization policies opened up India to international business. In this way, Fiat had a chance to involve to Indian Market with a wholly-owned subsidiary and they formed a JV to produce compact car, Uno. Also we can mention about India’s geographical advantages too. A factory in India can easily be a HUB for automobiles and spear parts for Fiat. In my opinion, this is an valuable asset for Fiat. Because, they will use and improve its suppliers, dealership network and customer service. If Fiat is able to create strong relationships with the suppliers competitive advantage in terms of speed, efficiency and economics will be created. Also, if it is able to create a communication with dealers, it will effect to improve customer satisfaction and experience. Also, it helps to cut manufacturuing costs, which caused to compete effectively against competittor. Is the business case for the joint venture convincing? Back your answer up with a financial analysis Yes, it is. First, lets have a look at what was the situation for Fiat India before this JV. Some of their products failed to provide sufficient volumes to...
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